Practicing Success
In case of change in profit sharing ratio among partner's in a firms, the Stock Account stood at ₹55,000 in the Balance Sheet of the old firm and at the time of reconstitution, it was observed that Stock A/c was overvalued by 10%. Identify the correct option with respect to treatment of stock account in Revaluation Account. |
Stock A/c will be debited by ₹5,500 Stock A/c will be credited by ₹5,000 Stock A/c will be debited by ₹5,000 Stock A/c will be credited by ₹5,500 |
Stock A/c will be credited by ₹5,000 |
The correct answer is Option (2) - Stock A/c will be credited by ₹5,000. Stock Account stood at ₹55,000 a + a/10 = 55000 As it is overvalued so the stock account is credited and revaluation account is debited by ₹5000. |